In the wake of coronavirus and the possibility of negative impacts on the economy, trustees of pension funds need to focus on their fiduciary duties.

Trustees must ensure that they are well-advised on the possible impact of COVID-19 on their investments and seek to mitigate any loss to assets under investment. The mitigation must include advice from experts on best practice in light of the pandemic.

Just as important, trustees must ensure that service providers have put in place measures to address service delivery in the face of the pandemic. Trustees should be considering their service level agreements to gain an understanding of their contractual rights. This will ensure that funds are able to keep service delivery on track even where service providers may have staff under self-isolation or in quarantine. While trustees would have historically ensured that administration systems, for example, are suitable, this due diligence may not necessarily have included the ability of the provider to deliver on systems where employees are not in office.

In short, trustees need to take a proactive approach to understanding the impact of the pandemic on investments and ongoing ability to do business. Despite the impact of COVID-19, trustees will still need to ensure that they act in compliance with their fiduciary duties.


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Coronavirus is yet to test the rules of medical schemes.

While it has been reported that a virus like COVID-19 would not usually be covered as a prescribed minimum benefit condition, where the virus amounts to an emergency condition then it will fall within the PMB legislation. In addition, to the extent that the virus results in medical consequences such as cardiac injury, the resultant condition may fall within the PMB provisions.

In the absence of COVID-19 being a PMB condition, the consequences for members of medical schemes are no different to when they have a flu virus.

In essence members who are hospitalised will have access to their hospital benefit at the applicable rate or will find that their medical savings have become depleted due to day to day use of doctors, pharmacists and importantly, screening.

Where medical scheme benefits are not sufficient to cover the costs associated with COVID-19, a member can make application for an ex gratia benefit, that is, payment of the costs at the discretion of the relevant scheme.

In addition to providing cover as set out in the rules of a scheme and the Medical Schemes Act, the board of a scheme must also take all reasonable steps to ensure that the interests of beneficiaries are protected. Given the highly contagious manner in which COVID-19 can spread, it may be argued that it is in the interests of beneficiaries to provide the care that is needed to infected persons to limit the spread, and that such cost of care must be provided on an ex gratia basis if not falling within the ambit of the rules or the PMB legislation.


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The outbreak of COVID-19 (Coronavirus) has affected many areas of business, and the legal implications extend far beyond the obvious sectors such as tourism and employment law. Click here to look at our publications for a range of insights on the impact of the pandemic if it continues to spread.

Here are eight areas affected by the virus that we discuss in the linked publications:

  • Insurance: claims under business interruption policies will arise, and, like all areas below, the interpretation of force majeure clauses will have to be examined. Life insurance and travel insurance claims will increase.
  • Construction and projects: Delays due to labour shortages or disruption of the supply chain will lead to contractual disputes and implicate related project finance contracts.
  • Trade Finance: questions around how the underlying sale contract allocates risk when the sold commodity is either not delivered, or delivery is delayed, on account of the virus, will arise.
  • Shipping: Port restrictions will lead to delays and business interruption. The lack of cover for some outcomes, and the potential for unlimited exposure is a concern.
  • Aviation: Demand for flights will decrease, and liability issues will arise.
  • Food and agribusiness: Food shortages will occur, as a result of interruptions in the supply chain and labour shortages.
  • Labour law: Workplace policies relating to sick leave, quarantining or barring potentially infected employees from entering the workplace or from travelling, and remote working arrangements, are a few of the areas that will have to be looked at. Security and liability issues will arise.
  • Medical law: Plans for the safe and efficient management of potential and known cases must be in place to protect society and to avert liability.
  • Protection of personal information: Concerns over privacy and data protection have already arisen globally, for example with regard to information on persons who have travelled to areas where the virus is known to have been present.

Above all, the respect for human dignity must prevail. Discrimination against people thought or known to be infected should be guarded against. Balancing the protection of society against the rights of infected and potentially infected persons is a priority.

If your business has a global aspect, a risk assessment of the various areas that will be affected by the virus should be done urgently. Local business should also start considering the impact of the virus on them, in case of possible spread of COVID-19 to South Africa, and also due to the potential for business interruption caused by disruptions to the global economy.


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This Californian Appeal Court judgment previously discussed here (Part 1, Part 2 and Part 3)) was also required to consider the insured’s argument that the Civil Authority Coverage Clause applies because the government orders were made in direct response to the continued and increasing presence of the Coronavirus, a dangerous physical condition, on and around its property.

And that the Civil Authority cover applies because the closure orders were the actions of civil authorities that prohibit access to the insured premises due to direct physical loss of or damage to other property caused by or arising from the Coronavirus.

The court said that it was not necessary to resolve any dispute as to whether the orders prohibit access to the insured premises.  The civil authority coverage does not apply because the plain language of the orders shows that they were not based on “direct physical loss of or damage to property” to other premises.

The orders were very clear about the reason they were issued.  It was to ensure that the maximum number of people self-isolate in their places of residence to the maximum extent feasible, while enabling essential services to continue, to slow the spread of Covid-19 to the maximum extent possible.

It was clear that the orders were made in an attempt to prevent the spread of the virus. The orders gave no indication they were issued “due to physical loss of or damage to ‘any property”.  In the circumstances the orders did not give rise to civil authority coverage.

The position would be no different in South African law.

(The Inns By The Sea v California Mutual Insurance Company (Super. Ct. No. 20CV001274)

Readers who have been following the Covid-19 business interruption litigation in the USA will know that the courts have largely, at summary judgment stage, dismissed claims for coverage alleging that the virus caused physical damage to insured premises.

That question has been now been pronounced upon by a jury trial.

A Missouri Federal jury considered the claim in a three day trial and delivered its verdict for the insurer after deliberating for just an hour and forty-five minutes.

The jury found that the insurer’s commercial property insurance policy did not provide coverage for the Covid-19 losses.  The policyholder had failed to show its properties were physically damaged by the virus and needed to be restored before operations could resume.

An academic molecular epidemiologist testified that there was no testing for the presence of the virus at any of the policyholder’s nine restaurant locations.

A chemical enzymologist testified that the coronavirus can be removed and inactivated by cleaning and can decay on its own.

The insurer contended the restaurant owner’s losses were caused by government shut down orders which were subject to an exclusion on the commercial property policy.

The policyholder’s evidence did not show physical contamination of any of its properties.  Even if it did the alleged loss was not caused by any physical loss, physical damage or physical contamination caused by the virus.

The case is K.C. Hopps Limited v Cincinnati Insurance Co. case number 4:20-cv-437 US District Court for the Western District of Missouri.

Herewith a copy of both the Motion and the Verdict.

Climate change is no longer a future threat. The associated risks have already had a devastating impact on the financial sector.

Financial institutions are financially exposed to the physical risks associated with more frequent severe weather events, as well as the transition risks associated with the changes necessary to achieve a low-carbon economy. Mortgage, commercial real estate, business and agricultural loans, as well as derivative instruments tied to these markets, are susceptible to losses related to severe weather events and other environmental changes. For example, the increase in the brutality and frequency of droughts, floods, fires and other natural disasters have damaged borrower assets and collateral and decreased their value, thus putting a strain on borrowers’ ability to repay lenders – leading to increased levels of default and losses on credit portfolios.

The 2019 bankruptcy of PG&E due to wildfires in California is a harsh demonstration of the credit risks that banks face due to climate change. This is why some banks have started taking active steps towards providing sustainable financing, treating climate risk not only as a reputational risk but also as a financial risk.

Climate change presents corresponding financial opportunities in the form of green bonds, impact investing, microfinance and credit for sustainable projects and development; and because some nations have considered  reducing their dependence on fossil fuels and are instead leveraging new renewable energy sources. At the end of 2018, the market for green and sustainable finance was already worth $30.7 trillion. In the first half of 2020, more than $275 billion of new sustainable financing had been raised on capital markets.

In the last year, despite the coronavirus pandemic, we’ve seen various forms of green and sustainable financing transactions and initiatives including the following highlights:

  • Nedbank’s listing of an innovative bond linked to the UN’s Sustainable Development Goals, on the Green Bonds segment of the JSE.
  • HSBC’s launch of a “green deposit” product with a commitment to on-lend the accrued inflows to finance sustainable projects and initiatives.
  • IFC and FMO’s $225 million loan to FirstRand Bank to finance green projects and to support climate-friendly initiatives.
  • Barclays PLC announcing a new climate policy with the aim of being a net zero bank by 2050 and committing to align its entire financing portfolio to the goals of the Paris Agreement on climate change.
  • Standard Bank’s sale of Africa’s largest green bond, raising $200 million from the IFC to finance climate-related projects.
  • Energize Venture’s $70 million injection into Aurora Solar, a software firm which has designed panels for more than 4 million solar projects.
  • JP Morgan Chase’s announcement that it would facilitate $200 billion by 2025 for sustainability finance.
  • The launch of the Green Assets Wallet, a blockchain database for issuers and investors of green bonds.
  • Investec launched its Environmental World Index Autocall, providing exposure to the Euronext CDP Environment World EW Index, which selects the highest-ranked 20 North American and 20 European companies, on the basis of their environmental performance.

In Africa, as the number of solar and wind renewable energy projects multiplies, the continent is expected to attract significant green financing in the coming years. According to the World Bank’s International Finance Corporation (IFC), South Africa’s climate-smart investment potential between now and 2030 is $588 billion.

This article is the first of a short series of articles to be published by the firm on green financing.

Construction sites and other workplaces need to comply with regulations and manage health and safety risks, while attempting to increase production, as we move into less restrictive lockdown levels.

The announcement of South Africa’s move to lockdown Level 2 with effect from 18 August 2020 is being celebrated by almost all economic sectors. Despite this, the Level 2 regulations emphasise that this is not the time for complacency. We must remain vigilant. In addition to the Level 2 regulations, industry members should look to the Consolidated Direction on Occupational Health and Safety Measures in Certain Workplaces issued by the Minister of Employment and Labour on 4 June 2020.

The pandemic will continue to affect how we conduct business. The construction industry has enjoyed a degree of relaxation in its ability to carry out operations since Level 3 regulations were promulgated, with some restrictions continuing under Level 2. These include rotations and shift systems and implementation of health protocols in accordance with directions issued by government. In large-scale projects of over 500 individuals there are additional requirements to provide safe commute for employees, where possible, and daily health screening and reporting obligations.

The implementation of risk-mitigation strategies has proved to be easier said than done. For example, the social distancing directions, or the alternative of using physical barriers between workers, is not practical in the construction environment, and the use of some breathalyser testing apparatus, a standard screening mechanism in the sector, may not be possible.

The challenge is to comply with the regulations and directions and at the same time manage risks in relation to:


The industry is inherently social because it requires a strong physical presence to get the job done. As a result, the industry is vulnerable to a multitude of risks. The mitigation of these risks should include:

  • safe access not only to and from the site but also in and around the site particularly in relation to shared spaces such as ablution facilities and canteen areas;
  • provision of adequate PPE and ensuring sufficient replacements are readily available;
  • enhanced hygiene required on site for all users;
  • dovetailing protocols of various role-players from employers to suppliers to avoid miscommunication, conflict and unnecessary interaction; and
  • providing ongoing education and platforms for communication to raise and maintain awareness and vigilance.

Supply Chain

While the economy is opening up, the process both locally and internationally remains volatile. The possibility of a resurgence of infections remains high. This may result in unavailability of suppliers and disruptions in procurement. The usual approach to supply chain management of ‘order when required’ may have to be reconsidered.


The implementation of health and safety protocols and mitigation strategies will cost contractors and operators, and ultimately employers, a substantial amount of money. This is, however, necessary to avoid the most significant commercial risk to construction works and operation of other workplaces, namely, total shut-down of a project or facility. The cost will have to be factored into the cost of construction and operation contracts which may affect the construction industry as a whole, and the future economic growth that is expected to come from investment in construction.

In an effort to reactivate the sector sustainably, several industry bodies including the Master Builders Association, South African Institute of Civil Engineers, and the South African Photovoltaic Industry Association in collaboration with others in the sector have developed safety protocols that offer practical solutions for the new normal in the industry and these protocols should be used as guidance on how to appropriately implement the lockdown regulations in workplaces.

In South Africa and the United Kingdom, coronavirus coverage disputes are centring around the interpretation of various non-damage extensions provided under the policy’s business interruption section.

In North America, both in Canada and the United States, the focus has been whether COVID-19 caused direct physical loss or damage to the insured property triggering business interruption coverage.

In the first ruling on the issue in the US, in Gavrilides Managing Company v Michigan Insurance Co the plaintiff restaurant owner contended that his business interruption coverage should include COVID-19 related losses. The insured did not allege that the property had been damaged or lost. The insured plaintiff argued that the Governor’s stay at home order interfered with the use of his restaurant business which was sufficient to trigger coverage.

The court held:

  • Only direct physical loss is covered.
  • Direct physical loss or damage to the property must be something with material existence, something that is tangible and something that alters the physical integrity of the property.

The claim for coverage pursuant to the civil authority provision of the policy was also dismissed because that provision also required physical loss or damage to trigger coverage.

The policy contained a virus exclusion which provided that the insurer ‘will not pay for loss or damages caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease’. The court found that the insurer was entitled to reply on that exclusion.

The approach is consistent with South African judgments requiring physical alteration to the structural integrity of the property for there to be physical damage. See these previous posts on insurance claims and COVID-19 and the impact of COVID-19 on the insurance market.

Companies which are registered to perform essential services during the lockdown should have by now received a new certificate from the Companies and Intellectual Property Commission (CIPC) for the extended lockdown period. The old certificates are no longer valid and will have to be disposed of.

The new certificates should be automatically emailed to companies registered as essential service businesses by 20 April 2020. If a new certificate has not been received by email, it should be downloaded via CIPC’s BizPortal website.

Any permits issued by companies to their employees travelling during the lockdown period which refer to the original lockdown dates must be reissued to instead refer to the ‘lockdown period’ to cater for the current extension (and any possible future extensions). To find out more about the permits required, click here.

Companies are reminded that having a certificate from CIPC is still subject to complying with the lockdown regulations. Where the CIPC finds that certificates have been issued to companies which do not meet the definitions of an essential service or that the company is not complying with the lockdown regulations, such certificate will be revoked, and the company will be referred to the South African Police Services. A false declaration by the company is a criminal offence and will result in prosecution, in terms of the lockdown regulations.

To promote the dissemination of real time public information (and to help in combatting the spread of fake news), internet sites operating within za Domain Name Authority (.zaDNA) top level domain name must be updated to include a landing page with a visible link to

.zaDNA is the statutory regulator and manager of ‘.za’ which is the internet country code for South Africa. This requirement would apply to all entities that have a website that ends with ‘.za’ and would include any company website that uses ‘’, every organisation that uses ‘’, and every academic institution that uses ‘’.

The requirement to have this link will apply for the duration of the declared national state of disaster. The link must be present on the opening page of a website, must be clearly visible, and must be an active link to the government’s website.

If you have not yet updated your websites to comply with this requirement, we suggest you do so as soon as possible. Although the consequences of non-compliance are not clear, it is a relatively simple exercise that can ensure compliance and assist in preventing the spread of fake news.

The direction was issued in terms of Government Gazette No 43164.